May Financial Focus: While VC Funding Continues to Flow Into SF Bay Area Biotech Companies, Early Stage Funding Slows

By Marie Daghlian

The San Francisco Bay Area continues to be a hotbed of company formation and financing not only in tech but also in biotech. Biotech and health-related companies raked in $1.2 billion in venture capital financing in the Q1 2018 in 32 deals. While it was less than the $1.7 billion raised in 39 deals in Q1 2017, it’s a healthy start to a promising year for raising growth capital as most of the funding was raised in expansion and late stage rounds, according to data from PwC Moneytree/CB Insights.

San Francisco Bay Area Venture Capital Funding by Quarter

Source: PwC MoneyTree/CB Insights

Seed and early stage deals comprised just slightly more than 10 percent of total funding with five companies raising a total of $138 million in the first quarter of 2018, compared to twenty such deals in Q1 2017 that raised $355.7 million in venture capital. As the chart below shows, the number of deals dropped to the lowest point since the first quarter of 2013 when there were just seven such financings.

San Francisco Bay Area Seed and Early Stage Venture Capital Funding by Quarter

Source: PwC MoneyTree/CB Insights

Ten companies accounted for $950 million, or three quarters of the total funding. Funding flowed to companies developing artificial intelligence (AI) enabling technologies, cancer immunotherapies and cell therapies, and personal genomics.

Top SF Bay Area Financings in Q1 2018

Company Raised in $M Category Principal Activity Stage of Financing
HeartFlow 240.0 Digital Health AI based Heart disease analysis Series E
Helix 200.0 Diagnostics Personal genomics Series B
Ideaya Biosciences 94.0 Therapeutics Synthetic lethality; I-O Series B
Tempest Therapeutics 70.0 Therapeutics Cancer immunotherapy Series B
QED Therapeutics 65.0 Therapeutics Rare diseases-FGFR disorders Seed
Eureka Therapeutics 60.0 Therapeutics Cancer cell therapy Series D
DNAnexus 58.0 Tools/Technology Bioinformatics Growth
Bigfoot Biomedical 55.0 Digital Health AI-enabled insulin delivery Series B
Unity Biotechnology 55.0 Therapeutics Age-related diseases Series C
Senti Biosciences 53.0 Therapeutics Synthetic biology, cell therapy Series A


Milpitas-based HeartFlow raised $240 million in February in a series E round from investors that included Wellington Management and Baillie Gifford. HeartFlow’s non-invasive technology leverages deep learning to create a personalized 3D model of a patient’s heart and coronary arteries and then uses computer algorithm to simulate blood flow and assess the impact of blockages on coronary blood flow in order to help clinicians diagnose and treat patients suspected of heart disease. Its HeartFlow FFRct Analysis has been shown to unnecessary invasive diagnostic coronary angiography procedures. The company has collaborative agreements with Philips, GE Healthcare, and Siemens, among others, and its technology is commercially available in the United States, Europe, Canada, and Japan.

Capitalizing on the growing interest in lifestyle DNA, Illumina spinout Helix raised $200 million in the beginning of March in a series B financing round from a syndicate that included Illumina, Kleiner Perkins Caufield Byers, Mayo Clinic, Sutter Hill Ventures, and Warburg Pincus. Helix made waves last summer when it launched a platform a one-stop shop for genomics tests of all kinds—from ancestry and disease risk to fitness, diet and nutrition. The company sequences your DNA from a one-time spit sample and you can pay for a variety of analyses offered from various partners. It shares only the part of your genome specific to partners’ tests.

South San Francisco-based IDEAYA Biosciences raised $94 million in a crossover series B financing in mid-March from a syndicate that included new investors BVF Partners, Perceptive Advisors, Nextech Invest, GV, Roche Venture Fund, 6 Dimensions Capital, Boxer Capital of the Tavistock Group, and Driehaus Capital Management. They joined existing investors 5AM Ventures, Canaan Partners, Celgene, WuXi Healthcare ventures, and Alexandria Venture Investments in the financing.

With synthetic lethality a therapeutic reality with the regulatory approval of PARP inhibitors in BRCA-deficient cancers, IDEAYA is focused on cancer therapeutics, pioneering the next generation of biomarker-enabled synthetic lethality therapies for genetically defined patient populations and advancing an immuno-oncology pipeline targeting immuno-metabolism and innate immunity. The company plans to use proceeds from the financing to advance its pipeline and initiate multiple clinical studies in 2019.

San Francisco-based Tempest Therapeutics came out of stealth mode with a $70 million series B financing from Versant Ventures, F-Prime Capital, Foresite Capital, and three Chinese funds: QuanCapital, Lilly Asia Ventures, and Eight Roads Ventures. Tempest is the first biotech spun out of Versant’s Inception drug discovery incubator that is not a “build to buy” model.

The biotech is developing small molecule drugs that modulate anti-tumor immunity pathways across many cancers, including a PPARα blocker and an IDO inhibitor.  Tempest is helmed by a seasoned team that includes Tom Dubensky, formerly CSO at Aduro Biotech, as president and CEO, and Peppi Prasit, formerly founder and CSO of Amira Pharmaceuticals, as acting chief scientific officer.